FINANCIAL CHAOS AROUND THE WORLD

China’s stock market continued to lose considerable value, down about a third in three weeks. Uncertainty over the future of Greece within the euro rocked European stock exchanges. And a technical glitch caused problems on the New York Stork Exchange, the world’s biggest.

The latter was resolved before the closing bell. Greece should be resolved by the weekend. China, the number two economic power, poses the greatest threat to the world’s economy. There are increasing fears that the Chinese stock markets are one big giant ponzi scheme, with nothing tangible to support them.

Late Thursday Greece handed over proposals to its European partners that will, hopefully, end the crisis affecting the beleaguered country.

Greece was a member of the euro from the very beginning, using the new European banknotes and coinage from day one on January 1st, 2002. Today, the euro is used by nineteen European countries. Euro notes are used daily by more people than the US dollar. The two currencies are the two most important currencies in the world and are used as payment for most international trading.

When Greece joined the euro, it was suddenly able to borrow vast amounts of money, which it did. It was not all used wisely. Following the crash of 2008, the country soon found itself unable to repay its loans. The dream currency had become a nightmare for the Greek people. Austerity was forced on the country by European bankers, making life very difficult for the average citizen. Austerity led the country into a downward spiral, which has recently been speeding up.

In January, the left-wing Syriza party won the election, promising an end to austerity. However, European bankers, anxious to get their money back, want to impose greater austerity as a condition for offering Greece more help. Without help, Greece will not be able to stay in the euro.

Without a doubt, Greek governments have been reckless. Government employees can retire at 48 on generous pensions. Corruption is rife, as also is tax avoidance.

Germany is owed 68 billion euros by Greece, France 65 billion (add 10% to get the US dollar equivalent). Other countries have loaned lesser amounts. Total Greek debt amounts to 323 billion euros. Greece is asking for a further bailout of 53.5 billion.

Although there is much talk of the Greek crisis, in a sense this is not about Greece, so much as Germany. Germany’s conservative government is taking a hard line, refusing to cancel debt or extend further loans. The Germans want their money back, on time. Germany’s stance is setting a precedent that will no doubt be repeated if any other country in the eurozone gets into trouble. Many have pointed out that when Germany was suffering economically after World War II, European finance ministers, including the Greek finance minister, generously cut Germany’s debt by 50%. If Germany would reciprocate now, Greece would be fine.

The Greek people voted in a referendum a few days ago, rejecting the austerity demands placed on them by Germany and others. However, they still want to remain in the eurozone, which is an apparent contradiction. If they leave the eurozone, they could restore their former currency, the drachma, but this would cut them off from many of the benefits of the eurozone. Business loans and mortgages in euros would have to be paid back in ever depreciating drachmas, leading to many foreclosures. Importers would have to pay upfront in euros, which may be hard to get if Greece leaves the eurozone.

Nobody wants a “Grexit” (a Greek exit from the euro), but it may not be possible to avoid it if the Greeks are unwilling to make the necessary structural changes to keep them in the euro.

This crisis is not the only crisis facing Europe at this time. The continent is having to work through a number of challenges all at once.

The migrant crisis is the second biggest issue confronting the European Union. So many people are fleeing from the Middle East and Africa into Europe that social cohesion is becoming a serious issue. One consequence of this massive movement of people is the rise of right-wing parties opposed to immigration.

Ukraine is a third challenge for Europe. Russia’s invasion of parts of Ukraine threatens the peace of Europe.

The possibility of Britain leaving the EU comes in at number four.

There’s even a fifth challenge, and that’s the relationship between European countries and the United States. France and Germany are both upset over the American NSA spying on them and their leaders, even though it’s quite likely they are doing the same to America.

Depending on how each of these issues is resolved, Europe could be very different in the near future.